What changed in this filing

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Item 1. Financial Statements

2024-07-24 compared with 2024-04-23 · 147 added, 90 removed, 581 unchanged (29% of the section changed)

3 unchanged sentences

(in thousands, except share and per-share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Investment in hotel properties, net $ 5,442,903 $ 5,490,776

15 unchanged sentences

Shareholders’ equity:

Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 690,000 at March 31, 2024 and December 31, 2023), 100,000,000 shares authorized;

27,600,000 shares issued and outstanding at March 31, 2024 and December 31, 2023

Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 690,000 at June 30, 2024 and December 31, 2023), 100,000,000 shares authorized;

27,600,000 shares issued and outstanding at June 30, 2024 and December 31, 2023

Common shares of beneficial interest, $ .01 par value, 500,000,000 shares authorized;

120,094,380 shares issued and outstanding at March 31, 2024 and 120,191,349 shares issued and outstanding at December 31, 2023

120,094,380 shares issued and outstanding at June 30, 2024 and 120,191,349 shares issued and outstanding at December 31, 2023

Additional paid-in capital 4,077,360 4,078,912

9 unchanged sentences

(in thousands, except share and per-share data)

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

Room $ 253,778 $ 250,934 $ 451,878 $ 447,308

31 unchanged sentences

(in thousands, except share and per-share data)

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

Comprehensive Income:

10 unchanged sentences

(in thousands, except share data)

For the three months ended March 31, 2024

For the three months ended June 30, 2024

Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Retained Earnings Total Shareholders' Equity Non-Controlling Interests Total Equity

Shares Amount Shares Amount

Balance at March 31, 2024

27,600,000 $ 276 120,094,380 $ 1,201 $ 4,074,898 $ 31,067 $ ( 1,381,450 ) $ 2,725,992 $ 87,517 $ 2,813,509

Share-based compensation — — — — 2,462 — — 2,462 1,061 3,523

Distributions on common shares/units — — — — — — ( 1,213 ) ( 1,213 ) ( 26 ) ( 1,239 )

Distributions on preferred shares/units — — — — — — ( 10,632 ) ( 10,632 ) ( 1,164 ) ( 11,796 )

Other comprehensive income (loss):

Change in fair value of derivative instruments — — — — — 4,183 — 4,183 ( 15 ) 4,168

Amounts reclassified from other comprehensive income — — — — — ( 5,969 ) — ( 5,969 ) — ( 5,969 )

Net income (loss) — — — — — — 30,936 30,936 1,303 32,239

Balance at June 30, 2024

27,600,000 $ 276 120,094,380 $ 1,201 $ 4,077,360 $ 29,281 $ ( 1,362,359 ) $ 2,745,759 $ 88,676 $ 2,834,435

For the three months ended June 30, 2023

Shares Amount Shares Amount

Balance at March 31, 2023

28,600,000 $ 286 123,632,667 $ 1,236 $ 4,142,491 $ 29,891 $ ( 1,258,275 ) $ 2,915,629 $ 88,482 $ 3,004,111

Repurchase of common shares — — ( 3,574,923 ) ( 35 ) ( 49,973 ) — — ( 50,008 ) — ( 50,008 )

Share-based compensation — — — — 2,162 — — 2,162 870 3,032

Distributions on common shares/units — — — — — — ( 1,211 ) ( 1,211 ) ( 26 ) ( 1,237 )

Distributions on preferred shares/units — — — — — — ( 10,987 ) ( 10,987 ) ( 1,164 ) ( 12,151 )

Other comprehensive income (loss):

Change in fair value of derivative instruments — — — — — 21,003 — 21,003 117 21,120

Amounts reclassified from other comprehensive income — — — — — ( 6,938 ) — ( 6,938 ) — ( 6,938 )

Net income (loss) — — — — — — 44,725 44,725 1,458 46,183

Balance at June 30, 2023

28,600,000 $ 286 120,057,744 $ 1,201 $ 4,094,680 $ 43,956 $ ( 1,225,748 ) $ 2,914,375 $ 89,737 $ 3,004,112

Pebblebrook Hotel Trust

Consolidated Statements of Equity - Continued

(in thousands, except share data)

For the six months ended June 30, 2024

Shares Amount Shares Amount

Balance at December 31, 2023

9 unchanged sentences

Net income (loss) — — — — — — 2,586 2,586 2,133 4,719

Balance at March 31, 2024

Balance at June 30, 2024

27,600,000 $ 276 120,094,380 $ 1,201 $ 4,077,360 $ 29,281 $ ( 1,362,359 ) $ 2,745,759 $ 88,676 $ 2,834,435

For the three months ended March 31, 2023

For the six months ended June 30, 2023

11 unchanged sentences

Net income (loss) — — — — — — 21,797 21,797 2,341 24,138

Balance at March 31, 2023

Balance at June 30, 2023

28,600,000 $ 286 120,057,744 $ 1,201 $ 4,094,680 $ 43,956 $ ( 1,225,748 ) $ 2,914,375 $ 89,737 $ 3,004,112

3 unchanged sentences

(in thousands)

For the three months ended March 31,

For the six months ended June 30,

Operating activities:

35 unchanged sentences

cities and resort properties located near our primary target urban markets and select destination resort markets, with an emphasis on major gateway coastal markets.

As of March 31, 2024, the Company owned interests in 46 hotels with a total of 11,924 gue st rooms .

As of June 30, 2024, the Company owned interests in 46 hotels with a total of 11,933 gue st rooms .

The hotel properties are located in:

16 unchanged sentences

The Company is the sole general partner of the Operating Partnership.

As of March 31, 2024, the Company owned 99.2 % of the common limited partnership units issued by the Operating Partnership ("common units").

As of June 30, 2024, the Company owned 99.2 % of the common limited partnership units issued by the Operating Partnership ("common units").

The remaining 0.8 % of the common units are owned by the other limited partners of the Operating Partnership.

63 unchanged sentences

Acquisition and Disposition of Hotel Properties

There were no acquisitions of hotel properties during the three months ended March 31, 2024.

There were no dispositions of hotel properties during the three months ended March 31, 2024.

There were no acquisitions of hotel properties during the six months ended June 30, 2024.

There were no dispositions of hotel properties during the six months ended June 30, 2024.

The following table summarizes disposition transactions during 2023 (in thousands):

9 unchanged sentences

Chicago, IL December 21, 2023 30,000

For the three months ended March 31, 2024 and 2023, the accompanying consolidated statements of operations and comprehensive income included operating income (loss) of zero and $( 1.3 ) million, respectively, excluding impairment loss and gain on sale of hotel properties related to the hotel properties sold and held for sale.

For the three and six months ended June 30, 2023, the accompanying consolidated statements of operations and comprehensive income included operating loss of $ 0.5 million and $ 1.8 million, respectively, excluding impairment loss and gain on sale of hotel properties related to the hotel properties sold or held for sale.

There was no impact for the three and six months ended June 30, 2024.

The sales of the hotel properties described above did not represent a strategic shift that had a major effect on the Company’s operations and financial results, and therefore, did not qualify as discontinued operations.

Investment in Hotel Properties

Investment in hotel properties as of March 31, 2024 and December 31, 2023 consisted of the following (in thousands):

March 31, 2024 December 31, 2023

Investment in hotel properties as of June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024 December 31, 2023

Land $ 810,789 $ 810,633

11 unchanged sentences

LaPlaya was closed in anticipation of the storm and required remediation and repairs from the damage and remained closed.

In 2023, LaPlaya began to reopen in stages as the buildings and facilities were repaired.

As of the first quarter of 2024, LaPlaya's remediation and repair was substantially complete.

In 2023, LaPlaya began to reopen in stages as the buildings and facilities were repaired and was substantially complete in the first quarter of 2024.

The Company’s insurance policies provide coverage for property damage, business interruption and reimbursement for other costs that were incurred relating to damages sustained during Hurricane Ian and the Company has recorded a receivable for the expenditures to date which it anticipates to collect from the insurance providers in excess of the deductibles.

For the three months ended March 31, 2024 and 2023, the Company incurred $ 0.1 million and $ 2.8 million, respectively, of costs related to payroll, repair and claims administration for which reimbursement from insurance policies is uncertain and therefore is included in other operating expenses in the Company's consolidated statements of operations and comprehensive income.

Through March 31, 2024, the Company received a total of $ 100.0 million in preliminary advances from the insurance providers.

For the six months ended June 30, 2024 and 2023, the Company incurred $ 0.2 million and $ 4.1 million, respectively, of costs related to payroll, repair and claims administration for which reimbursement from insurance policies is uncertain and therefore is included in other operating expenses in the Company's consolidated statements of operations and comprehensive income.

Through June 30, 2024, the Company received a total of $ 117.5 million in preliminary advances from the insurance providers.

The Company continues to work with the insurance providers on the settlement of the property and business interruption claims.

2 unchanged sentences

As a result of this review, the Company may identify an impairment trigger has occurred and assess its investment in hotel properties for recoverability.

During the three months ended March 31, 2024 and 2023, no impairment losses were incurred.

During the six months ended June 30, 2024 and 2023, no impairment losses were incurred.

Right-of-use Assets and Lease Liabilities

4 unchanged sentences

The right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements.

As of March 31, 2024, the Company's lease liabilities consisted of operating lease liabilities of $ 320.6 million and financing lease liabilities of $ 43.5 million.

As of June 30, 2024, the Company's lease liabilities consisted of operating lease liabilities of $ 320.7 million and financing lease liabilities of $ 43.7 million.

As of December 31, 2023, the Company's lease liabilities consisted of operating lease liabilities of $ 320.6 million and financing lease liabilities of $ 43.4 million.

8 unchanged sentences

On January 3, 2024, the Company also repaid $ 50.0 million of its outstanding Term Loan 2025 obligation with available cash.

The Company's debt consisted of the following as of March 31, 2024 and December 31, 2023 (dollars in thousands):

The Company's debt consisted of the following as of June 30, 2024 and December 31, 2023 (dollars in thousands):

Balance Outstanding as of

Interest Rate at March 31, 2024

Maturity Date March 31, 2024 December 31, 2023

Interest Rate at June 30, 2024

Maturity Date June 30, 2024 December 31, 2023

Revolving credit facilities

26 unchanged sentences

(1) Borrowings bear interest at floating rates.

Interest rate at March 31, 2024 gives effect to interest rate hedges.

Interest rate at June 30, 2024 gives effect to interest rate hedges.

(2) The Company has the option to extend the maturity date for up to two six-month periods, pursuant to certain terms and conditions and payment of an extension fee.

(3) This loan bears interest at a floating rate equal to daily SOFR plus a spread of 3.75 %.

The interest rate at March 31, 2024 gives effect to an interest rate swap.

The interest rate at June 30, 2024 gives effect to an interest rate swap.

The Company has the option to extend the maturity date for up to two one-year periods, pursuant to certain terms and conditions and payment of an extension fee.

(4) On January 3, 2024, the Company entered into the First Amendment to the Credit Agreement which extended the maturity date of $ 356.7 million borrowed under Term Loan 2024 to January 2028 (shown above as Term Loan 2028).

In connection with the extension, the Company also repaid $ 60.0 million of its borrowings under Term Loan 2024 with available cash.

The remaining $ 43.3 million of Term Loan 2024's balance will continue to mature in October 2024 and will be paid with available cash or borrowings under the revolving credit facility at maturity.

(5) On January 3, 2024, the Company r epaid $ 50.0 million of i ts outstanding Term Loan 2025 obligation with available cash.

Unsecured Revolving Credit Facilities

2 unchanged sentences

The margins for revolving credit facility loans range in amount from 1.45 % to 2.50 % for SOFR-based loans and 0.45 % to 1.50 % for Base Rate-based loans, depending on the Company’s leverage ratio.

As of March 31, 2024, the Company had no outstanding borrowings, $ 13.7 million of outstanding letters of credit and a borrowing capacity of $ 636.3 million remaining on the senior unsecured revolving credit facility.

As of June 30, 2024, the Company had no outstanding borrowings, $ 13.7 million of outstanding letters of credit and a borrowing capacity of $ 636.3 million remaining on the senior unsecured revolving credit facility.

The Company is required to pay an unused commitment fee at an annual rate of 0.20 % or 0.30 % of the unused portion of the senior unsecured revolving credit facility, depending on the amount of borrowings outstanding.

3 unchanged sentences

Any outstanding standby letters of credit reduce the available borrowings on the senior unsecured revolving credit facility by a corresponding amount.

Standby letters of credit of $ 13.7 million and $ 13.6 million were outstanding as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024, the Company also has a $ 20.0 million unsecured revolving credit facility (the "PHL Credit Facility") to be used for PHL's working capital and general corporate purposes.

Standby letters of credit of $ 13.7 million and $ 13.6 million were outstanding as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, the Company also has a $ 20.0 million unsecured revolving credit facility (the "PHL Credit Facility") to be used for PHL's working capital and general corporate purposes.

On October 13, 2022, PHL amended and restated the agreement governing the PHL Credit Facility to extend the maturity to October 2026.

2 unchanged sentences

The PHL Credit Facility is subject to debt covenants substantially similar to the covenants under the Credit Agreement, which governs the Company's senior unsecured revolving credit facility.

As of March 31, 2024, the Company had no borrowings under the PHL Credit Facility and had $ 20.0 million borrowing capacity remaining available under the PHL Credit Facility.

As of March 31, 2024, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities.

As of June 30, 2024, the Company had no borrowings under the PHL Credit Facility and had $ 20.0 million borrowing capacity remaining available under the PHL Credit Facility.

As of June 30, 2024, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities.

Unsecured Term Loan Facilities

As of March 31, 2024, the term loans provided for in the Credit Agreement will mature as follows:

As of June 30, 2024, the term loans provided for in the Credit Agreement will mature as follows:

$ 43.3 million in October 2024 (Term Loan 2024), $ 410.0 million in October 2025 (Term Loan 2025), $ 460.0 million in October 2027 (Term Loan 2027) and $ 356.7 million in January 2028 (Term Loan 2028).

2 unchanged sentences

The term loans are subject to the debt covenants in the Credit Agreement.

As of March 31, 2024, the Company was in compliance with all debt covenants of its term loans.

As of June 30, 2024, the Company was in compliance with all debt covenants of its term loans.

The Company entered into interest rate swap agreements to fix the SOFR rate on a portion of these unsecured term loan facilities.

12 unchanged sentences

The conversion rate is subject to adjustment in certain circumstances.

As of March 31, 2024 and December 31, 2023, the if-converted value of the Convertible Notes did not exceed the principal amount.

As of June 30, 2024 and December 31, 2023, the if-converted value of the Convertible Notes did not exceed the principal amount.

The Company may redeem for cash all or a portion of the Convertible Notes, at its option, after December 20, 2023, upon certain circumstances.

8 unchanged sentences

The debt covenants of these notes are substantially similar to those of the Company's senior unsecured revolving credit facility.

As of March 31, 2024, the Company was in compliance with all such debt covenants.

As of June 30, 2024, the Company was in compliance with all such debt covenants.

Mortgage Loans

12 unchanged sentences

Interest Expense

The components of the Company's interest expense consisted of the following for the three months ended March 31, 2024 and 2023 (in thousands):

For the three months ended March 31,

The components of the Company's interest expense consisted of the following for the three and six months ended June 30, 2024 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

Unsecured revolving credit facilities $ 497 $ 498 $ 995 $ 1,066

7 unchanged sentences

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates, taking into consideration general market conditions and maturity of the debt with similar credit terms and is classified within Level 2 of the fair value hierarchy.

The estimated fair value of the Company’s fixed rate debt (unsecured senior notes, convertible senior notes and the Estancia mortgage loan) as of March 31, 2024 and December 31, 2023 was $ 675.9 million and $ 686.3 million, respectively.

The estimated fair value of the Company’s fixed rate debt (unsecured senior notes, convertible senior notes and the Estancia mortgage loan) as of June 30, 2024 and December 31, 2023 was $ 691.6 million and $ 686.3 million, respectively.

Derivative and Hedging Activities

2 unchanged sentences

All unrealized gains and losses on these hedging instruments are reported in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The Company's interest rate swaps at March 31, 2024 and December 31, 2023 consisted of the following, by maturity date (dollars in thousands):

The Company's interest rate swaps at June 30, 2024 and December 31, 2023 consisted of the following, by maturity date (dollars in thousands):

Aggregate Notional Value as of

Hedge Type Interest Rate Range (SOFR) Maturity March 31, 2024 December 31, 2023

Hedge Type Interest Rate Range (SOFR) Maturity June 30, 2024 December 31, 2023

Swap-cash flow 2.47 % - 2.50 %

15 unchanged sentences

The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions.

As of March 31, 2024, the Company's derivative instruments were in an asset position with an aggregate fair value of $ 31.3 million.

None of the Company's derivative instruments was in a liability position as of March 31, 2024.

As of June 30, 2024, the Company's derivative instruments were in an asset position with an aggregate fair value of $ 29.5 million.

None of the Company's derivative instruments was in a liability position as of June 30, 2024.

Derivative assets are included in prepaid expenses and other assets and derivative liabilities are included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.

1 unchanged sentence

The Company presents revenue on a disaggregated basis in the accompanying consolidated statements of operations and comprehensive income.

The following table presents revenues by geographic location for the three months ended March 31, 2024 and 2023 (in thousands):

For the three months ended March 31,

Southern Florida/Georgia $ 80,957 $ 71,029

The following table presents revenues by geographic location for the three and six months ended June 30, 2024 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

San Diego, CA $ 84,983 $ 76,921 $ 156,478 $ 143,768

Southern Florida/Georgia 68,934 58,980 149,891 130,009

Boston, MA 79,958 76,587 125,878 119,258

6 unchanged sentences

Seattle, WA — 2,131 — 5,551

14,960 14,739 19,754 22,426

Total Revenues $ 397,110 $ 384,343 $ 711,179 $ 690,062

16 unchanged sentences

Common shares repurchased by the Company cease to be outstanding and become authorized but unissued common shares.

During the three months ended March 31, 2024, the Company repurchased 318,269 common shares for an aggregate purchase price of $ 5.0 million, or an average of approximately $ 15.71 per share.

As of March 31, 2024, $ 141.0 million of common shares remained available for repurchase under this program.

During the six months ended June 30, 2024, the Company repurchased 318,269 common shares for an aggregate purchase price of $ 5.0 million, or an average of approximately $ 15.71 per share.

As of June 30, 2024, $ 141.0 million of common shares remained available for repurchase under this program.

Common Dividends

The Company declared the following dividends on common shares/units for the three months ended March 31, 2024:

The Company declared the following dividends on common shares/units for the six months ended June 30, 2024:

Dividend per Share/Unit For the Quarter Ended Record Date Payable Date

$ 0.01 March 31, 2024 March 29, 2024 April 15, 2024

$ 0.01 June 30, 2024 June 28, 2024 July 15, 2024

Preferred Shares

The Company is authorized to issue up to 100,000,000 preferred shares of beneficial interest, $ 0.01 par value per share (“preferred shares”).

The following preferred shares were outstanding as of March 31, 2024 and December 31, 2023:

Security Type March 31, 2024 December 31, 2023

The following preferred shares were outstanding as of June 30, 2024 and December 31, 2023:

Security Type June 30, 2024 December 31, 2023

6.375 % Series E

18 unchanged sentences

Under the terms of the program, the Company may repurchase up to an aggregate of $ 100.0 million of our 6.375 % Series E Cumulative Redeemable Preferred Shares, 6.30 % Series F Cumulative Redeemable Preferred Shares, 6.375 % Series G Cumulative Redeemable Preferred Shares and 5.70 % Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement.

During the three months ended March 31, 2024, no Preferred Shares were repurchased under this program.

As of March 31, 2024, $ 84.2 million of Preferred Shares remained available for repurchase under this program.

During the six months ended June 30, 2024, no Preferred Shares were repurchased under this program.

As of June 30, 2024, $ 84.2 million of Preferred Shares remained available for repurchase under this program.

The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions.

2 unchanged sentences

Preferred Dividends

The Company declared the following dividends on preferred shares for the three months ended March 31, 2024:

The Company declared the following dividends on preferred shares for the six months ended June 30, 2024:

Security Type Dividend per Share/Unit For the Quarter Ended Record Date Payable Date

1 unchanged sentence

$ 0.40 March 31, 2024 March 29, 2024 April 15, 2024

6.375 % Series E

$ 0.40 June 30, 2024 June 28, 2024 July 15, 2024

6.30 % Series F

$ 0.39 March 31, 2024 March 29, 2024 April 15, 2024

6.30 % Series F

$ 0.39 June 30, 2024 June 28, 2024 July 15, 2024

6.375 % Series G

$ 0.40 March 31, 2024 March 29, 2024 April 15, 2024

6.375 % Series G

$ 0.40 June 30, 2024 June 28, 2024 July 15, 2024

5.70 % Series H

$ 0.36 March 31, 2024 March 29, 2024 April 15, 2024

5.70 % Series H

$ 0.36 June 30, 2024 June 28, 2024 July 15, 2024

Non-controlling Interest of Common Units in Operating Partnership

4 unchanged sentences

On May 11, 2022, in connection with the acquisition of Inn on Fifth in Naples, Florida, the Company issued 16,291 OP units in the Operating Partnership.

As of March 31, 2024 and December 31, 2023, the Operating Partnership had 16,291 OP units held by third parties, excluding LTIP units.

As of March 31, 2024, the Operating Partnership had two classes of long-term incentive partnership units ("LTIP units"), LTIP Class A units and LTIP Class B units.

As of June 30, 2024 and December 31, 2023, the Operating Partnership had 16,291 OP units held by third parties, excluding LTIP units.

As of June 30, 2024, the Operating Partnership had two classes of long-term incentive partnership units ("LTIP units"), LTIP Class A units and LTIP Class B units.

All of the outstanding LTIP units are held by officers of the Company.

On February 17, 2023, the Board of Trustees granted 131,276 LTIP Class B units to its executive officers.

On February 15, 2024, the Board of Trustees granted 136,353 LTIP Class B units to its executive officers.

As of March 31, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

On February 17, 2023, the Board of Trustees granted 131,276 LTIP Class B units to executive officers.

On February 15, 2024, the Board of Trustees granted 136,353 LTIP Class B units to executive officers.

As of June 30, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

As of December 31, 2023, the Operating Partnership had 858,484 LTIP units outstanding, of which 277,136 LTIP units have vested.

8 unchanged sentences

At any time following a change of control of the Company, holders of Series Z Preferred Units may elect to redeem some or all of their units for, at the Company’s election, cash or common shares having an equivalent value.

As of March 31, 2024, the Operating Partnership had 3,104,400 Series Z Preferred Units outstanding.

As of June 30, 2024, the Operating Partnership had 3,104,400 Series Z Preferred Units outstanding.

Share-Based Compensation Plan

5 unchanged sentences

All outstanding share awards are subject to full or partial accelerated vesting upon a change in control and upon death or disability or certain other employment termination events as set forth in the award agreements.

As of March 31, 2024, there were 1,176,681 common shares available for issuance under the Plan.

As of June 30, 2024, there were 1,176,163 common shares available for issuance under the Plan.

Service Condition Share Awards

1 unchanged sentence

These shares generally vest over three to five years based on continued service or employment.

The following table provides a summary of service condition restricted share activity as of three months ended March 31, 2024:

The following table provides a summary of service condition restricted share activity during the six months ended June 30, 2024:

Shares Weighted-Average

4 unchanged sentences

Forfeited ( 1,440 ) $ 15.92

Unvested at March 31, 2024

Unvested at June 30, 2024

409,121 $ 18.07

For the three months ended March 31, 2024 and 2023, the Company recognized approximately $ 0.8 million and $ 0.9 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2024, the Company recognized approximately $ 0.9 million and $ 1.7 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2023, the Company recognized approximately $ 0.7 million and $ 1.6 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income.

Performance-Based Equity Awards

2 unchanged sentences

The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2027 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2024 through December 31, 2026.

For the three months ended March 31, 2024 and 2023, the Company recognized approximately $ 1.3 million and $ 1.2 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2024, the Company recognized approximately $ 1.6 million and $ 2.9 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2023, the Company recognized approximately $ 1.4 million and $ 2.6 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income.

Long-Term Incentive Partnership Units

As of March 31, 2024, the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units.

As of June 30, 2024, the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units.

All of the outstanding LTIP units are held by officers of the Company.

On February 15, 2024, the Board of Trustees granted 136,353 LTIP Class B units to its executive officers.

On February 15, 2024, the Board of Trustees granted 136,353 LTIP Class B units to executive officers.

These LTIP units will vest ratably on January 1, 2025, 2026 and 2027, contingent upon continued employment with the Company.

The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 16.13 per unit with an aggregate grant date fair value of $ 2.2 million.

As of March 31, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

As of June 30, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

As of December 31, 2023, the Operating Partnership had 858,484 LTIP units outstanding, of which 277,136 LTIP units have vested.

Only vested LTIP units may be converted to OP units, which in turn can be tendered for redemption as described in Note 7.

For the three months ended March 31, 2024 and 2023, the Company recognized approximately $ 1.0 million and $ 0.8 million, respectively, in expense related to these LTIP units.

For the three and six months ended June 30, 2024, the Company recognized approximately $ 1.0 million and $ 2.0 million, respectively, in expense related to these LTIP units.

The aggregate expense related to the LTIP unit grants is presented as non-controlling interest in the Company’s accompanying consolidated balance sheets.

For the three and six months ended June 30, 2023, the Company recognized approximately $ 0.9 million and $ 1.7 million, respectively, in expense related to these LTIP units.

The aggregate expense related to the LTIP unit grants is presented as non-controlling interest in the Company’s accompanying consolidated balance sheets.

PHL is subject to federal and state corporate income taxes at statutory tax rates.

2 unchanged sentences

In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions, where applicable.

As of March 31, 2024 and December 31, 2023, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2020.

As of June 30, 2024 and December 31, 2023, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2020.

Earnings (Loss) Per Share

The following is a reconciliation of basic and diluted earnings (loss) per common share (in thousands, except share and per-share data):

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

Net income (loss) attributable to common shareholders $ 20,304 $ 33,738 $ ( 18,677 ) $ ( 178 )

1 unchanged sentence

Undistributed earnings attributable to share-based compensation ( 147 ) ( 276 ) — —

Net income (loss) available to common shareholders — basic and diluted $ ( 38,990 ) $ ( 33,927 )

Weighted-average number of common shares — basic and diluted 120,085,226 125,488,415

Net income (loss) available to common shareholders — basic $ 20,147 $ 33,452 $ ( 18,696 ) $ ( 199 )

Interest expense on convertible notes 3,281 3,281 — —

Net income (loss) available to common shareholders — diluted $ 23,428 $ 36,733 $ ( 18,696 ) $ ( 199 )

Weighted-average number of common shares — basic 120,094,380 121,696,400 120,089,803 123,581,926

Effect of dilutive share-based compensation 209,309 101,380 — —

Effect of dilutive convertible notes 29,441,175 29,441,175 — —

Weighted-average number of common shares — diluted 149,744,864 151,238,955 120,089,803 123,581,926

Net income (loss) per share available to common shareholders — basic $ 0.17 $ 0.27 $ ( 0.16 ) $ —

Net income (loss) per share available to common shareholders — diluted $ 0.16 $ 0.24 $ ( 0.16 ) $ —

For the three months ended March 31, 2024 and 2023, 1,217,150 and 1,158,282 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive.

For the three months ended March 31, 2024 and 2023, 29,441,175 of common shares underlying the Convertible Notes have been excluded from diluted shares as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2024, 617,561 and 1,217,668 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2023, 893,194 and 1,110,184 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2024, zero and 29,441,175 , respectively, of common shares underlying the Convertible Notes have been excluded from diluted shares as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2023, zero and 29,441,175 , respectively, of common shares underlying the Convertible Notes have been excluded from diluted shares as their effect would have been anti-dilutive.

The LTIP units and OP units held by the non-controlling interest holders have been excluded from the denominator of the diluted earnings per share as there would be no effect on the amounts since the limited partners' share of income (loss) would also be added or subtracted to derive net income (loss) available to common shareholders.

10 unchanged sentences

The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel.

For the three months ended March 31, 2024 and 2023, combined base and incentive management fees were $ 8.0 million.

For the three and six months ended June 30, 2024, combined base and incentive management fees were $ 11.2 million and $ 19.2 million, respectively.

For the three and six months ended June 30, 2023, combined base and incentive management fees were $ 10.8 million and $ 18.8 million, respectively.

Base and incentive management fees are included in other direct and indirect expenses in the Company's accompanying consolidated statements of operations and comprehensive income.

2 unchanged sentences

Restricted Cash

At March 31, 2024 and December 31, 2023, the Company had $ 8.3 million and $ 9.9 million, respectively, in restricted cash, which consisted of funds held in cash management accounts held by a lender, reserves for replacement of furniture and fixtures, and reserves to pay for real estate taxes, ground rent or property insurance under certain hotel management agreements or loan agreements.

At June 30, 2024 and December 31, 2023, the Company had $ 9.5 million and $ 9.9 million, respectively, in restricted cash, which consisted of funds held in cash management accounts held by a lender, reserves for replacement of furniture and fixtures, and reserves to pay for real estate taxes, ground rent or property insurance under certain hotel management agreements or loan agreements.

Hotel, Ground and Finance Leases

As of March 31, 2024, the following hotels were subject to leases as follows:

As of June 30, 2024, the following hotels were subject to leases as follows:

Lease Properties Lease Type Lease Expiration Date

2 unchanged sentences

Paradise Point Resort & Spa Operating lease May 2050

Harbor Court Hotel San Francisco Finance lease August 2052

Hotel Monaco Washington DC Operating lease November 2059

Argonaut Hotel Operating lease December 2059

Hotel Zephyr Fisherman's Wharf Operating lease February 2062

Hotel Zephyr Fisherman's Wharf and Retail

Operating lease February 2062

Viceroy Santa Monica Hotel Operating lease September 2065

7 unchanged sentences

Operating lease January 2089

Hotel Zeppelin San Francisco Operating and finance lease June 2089 (4)

Hotel Zelos San Francisco Operating lease June 2097

1 unchanged sentence

Margaritaville Hollywood Beach Resort Operating lease July 2112

Hotel Zeppelin San Francisco Operating and finance lease June 2089 (4)

Harbor Court Hotel San Francisco Finance lease August 2052

______________________

8 unchanged sentences

Ground rent expense is included in real estate taxes, personal property taxes, property insurance and ground rent in the Company's accompanying consolidated statements of operations and comprehensive income.

The components of ground rent expense for the three months ended March 31, 2024 and 2023 are as follows (in thousands):

For the three months ended March 31,

The components of ground rent expense for the three and six months ended June 30, 2024 and 2023 are as follows (in thousands):

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

Fixed ground rent $ 4,796 $ 4,782 $ 9,592 $ 9,564

5 unchanged sentences

Supplemental Information to Statements of Cash Flows (in thousands)

For the three months ended March 31,

For the six months ended June 30,

Interest paid, net of capitalized interest $ 53,709 $ 48,852

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements